Earnings reports have continued to trigger selloffs in large cap stocks overnight and into this morning as investors focus more on future outlooks than past results. These moves provide more evidence to suggest that the big market rally of the last three months likely has already priced in high expectations.
Chipotle Mexican Grill is down 11.8% premarket despite meeting expectations after the restaurant chain cut same store sales guidance for this year. Tesla is down 6.2% premarket after reporting 16% lower sales versus a year ago, with European sales sliding and competition increasing. Tesla’s management could have a number of rough quarters ahead.
Southwest Airlines suggested bookings have stabilized while American Airlines cut guidance, but the result for investors was the same, with both stocks falling 3.8% and 6.2% respectively premarket. The reaction to Big Tech earnings beats is mixed with Alphabet up 3.7% premarket and IBM* down 6.4% premarket.
In economic news today, the European Central Bank maintained its benchmark interest rate at 2.15% as had been widely expected. Canada retail sales fell 1.1% in May, in line with expectations. Flash PMI reports have been rolling out overnight with most results in the 48.0 to 52.0% zone, near the 50.0 expansion/contraction line. A disappointing Japan flash Manufacturing PMI number was the most notable. US flash Manufacturing PMI (Street 52.5) and flash Services PMI (Street 53.0) are due at 9:45 am EDT followed by US new home sales at 10:00 am.
Dow futures are down 0.5% while NASDAQ futures are up 0.3%, as investors determine what to make of the overnight numbers. European action is also mixed with the Dax up 0.4%, the CAC down 0.1% and the FTSE up 1.0%. Commodities are climbing with Copper and Crude Oil both up 0.9%. The US Dollar is up a bit today, sending Gold down 0.9%, the Euro down 0.2% and the Loonie down 1.0%.
*Shares of IBM are held in some portfolios managed by SIA Wealth Management.